Air NZ warns city of landing fee fallout

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Air New Zealand has sent a clear signal to Invercargill Airport that if it raises landing fees the airline could reduce flights to the city and increase ticket prices.

Airport chairman Joe O'Connell and Invercargill City Council holding company (Holdco) deputy chairman Cam McCulloch last week said landing fee increases were likely.

They were speaking after a $3 million Holdco buy-up of stock designed to fund maintenance on the airport's apron and taxiway surface which left Holdco with a 97 per cent stake.

When asked about the likely impact of landing fee increases at Invercargill airport, Air New Zealand said it was too early to judge.

However, spokeswoman Marie Hosking directed The Southland Times to a statement issued in October, in which it said it would reduce flights and put up ticket prices into Gisborne airport after landing fees there were raised 106 per cent.

The East Coast airport is run by the private Eastland Group on behalf of the Gisborne District Council.

The statement said Air New Zealand had been struggling to break even on many regional flights for some time, although it did not specify which ones.

Gisborne's decision meant fares for a return flight would rise $8 per person, the statement said.

Gisborne Mayor Meng Foon said Air New Zealand had cut down the number of flights but the number of seats remained the same.

"They always are threatening," he said. "Ever since I've been on council, they've said if you're going to raise charges we going to raise prices and [cut] flights . . . it is a normal ploy from Air New Zealand."

Gisborne had to raise its fees because it had not changed them for more than a decade, he said.

Mr O'Connell said landing fees were always a sensitive subject.

The airport was reviewing the fees and the rest of its income stream, he said.

"It requires a certain amount of consultation," he said. "We just need to work through that and we haven't had any in-depth discussions with Air New Zealand."

He would not reveal what Air New Zealand was paying to land, saying it was commercially sensitive information.

He did not consider the references to Gisborne airport a threat.

"We've never had a discussion of that tone with Air New Zealand."

In March 2010, in response to questions about the price of tickets to Invercargill, Air New Zealand said prices would stay high as long as landing charges did not come down. It was paying $331 per aircraft landing at the time - $4.64 a passenger.

Air New Zealand also paid $3.6 million towards resurfacing the runway in 2010, a deal negotiated by the airport in 2008.